As dealership reserve shrinks, the pressure is increasing on the F&I office to find other avenues to enhance and replenish overall profit margins. Shoring up dealers’ bottom line in F&I is more critical than ever before. Historically, the focus in F&I has been on big-ticket items, but as lease penetration reaches new highs and reserves shrink, ensuring that a balance of products are being offered could be the key to maximizing profit. Offering and being well versed in appearance protection products might be just what the doctor ordered to stay ahead in today’s changing market.

Andy Parvich, national sales director, Siskin, has found that dealers are often unaware of their lack of focus on appearance protection. He believes the job of a general agent is to make the importance of this clear to the dealer on a profit level. “You have to reopen their eyes sometimes. At the end of the day, appearance products are the products the customer will benefit from on a daily basis.”

Lease and Cash Customers

The recent growth in luxury vehicle leasing is having a positive impact on the sale of appearance products. The benefits appearance protection products offer are especially applicable to cash and lease customers. They can enhance customers’ trade in value by keeping the car looking new. They can also prevent the customer from being charged for minor damages at the end of a lease.

When dealing with lease customers, Stan Starnes, executive vice president, Dent Zone Companies Inc., recommends being proactive. “Ask the customer why they would want to live with a dent for the entire term of their lease and then get the covered repair fixed just before they trade the car in?” Instead of selling protection that works this way, Starnes recommends offering protection that the customer can take advantage of as soon as a dent occurs.

“They want a new and fresh looking car every day,” added Jerry Biller, president, Usbergo Inc., “So ask them, ‘Would you like to look at a dent for three years (until the end of the lease term) or get it fixed right away?’ If you can get dealers to focus on enhancing the customer’s ownership experience, F&I will be more profitable.”

Aaron Cooper, director of F&I, Dent Wizard International, agreed, “Why get a program that doesn’t benefit them until the end of the lease? Customers like that approach.”

The Appeal for Dealers and Customers

Biller recommends including appearance products as a part of the core offering in F&I. “You want the customer to consider these products first and not just present appearance protection as an afterthought.” Biller says it’s the relevance to the customer that makes them core products. “A dealer needs to make sure that they are offering ‘actual products’ in the finance office – and not just contracts.”

Jeff Phillips, account manager, XPEL Technologies Corp., sells a protective film that he says works everyday ­­– unlike some products, such as theft recovery, that customers may never see the benefit from. “As people keep cars longer, products that maintain the vehicle’s appearance not only result in greater profits when a car is eventually traded in, but also improve the entire ownership experience.”

Cooper sees appearance protection products not only as revenue generators, but also as tools for increasing customer retentions. “When we sell appearance products and the customer comes back to the dealership, it provides another opportunity for the dealer to provide a positive experience for the customer that will hopefully result in them being a repeat customer.”

Appearance protection products can also be sold after the vehicle sale. Offering appearance products in the service drive and when a customer files a claim can be a successful strategy that give customers something of immediate value.

Despite the added value of selling in the service drive, Cooper says the greatest success comes from a well trained F&I manager who is knowledgeable about both the products and the disclosures. The panel agreed, adding that while service drive selling is an option, the F&I office is the best fit for offering these products.

Appearance Protection and the Sales Department

By training the sales department about product options, they can be the first to expose a customer to appearance products. By pointing out areas in which a new vehicle is not protected and then reassuring the customer that the dealership can provide a solution, the sales department whets the customer’s appetite, so to speak. Then, when customers arrive in F&I they are more interested and receptive to hearing about the products.

Phillips says he has seen the most success when the dealer takes advantage of the downtime after the customer selects a car and the sales department does a soft sell presenting the products. “Often it is as simple as exposing the need for products earlier to the customer. Point out dents and dings on the customer’s trade-in when they first bring the vehicle in and let them know that those dents and dings will lower their trade-in value.”

Pavich agreed that there is an advantage to involving the sales department. “They need to know what the products are and what the coverage is. Sit down with the sales team and make sure they know the ins and outs of the products. Training them as well as F&I can make a big difference.”

Another way the sales team can facilitate the sale of F&I products is by giving the customer a live demo. “Make it fun,” says Pavich, “If the sales team can involve customers in a way that is fun, that’s great.”

“You can only present so many things,” added Starnes, “We talk about needs awareness. You have to develop this and set the stage. Our value proposition is, ‘You will get a dent. What will you do?’ You only have to get three dents and the product is paid for.” Starnes says their products “play well with others” and also do not require a lengthy presentation when it comes down to the array of products offered on the menu.

Menu Selling and Price

The placement of appearance protection on the menu is a factor worth considering. Pavich says that F&I managers are often trained to present service contracts first on a menu. However in his experience, Pavich says this can turn customers off. He recommends presenting appearance products first. “Appearance matters to everyone. Whether they are a Chevy buyer or a Mercedes buyer, people want their vehicle to look nice. It is a matter of opening their eyes and offering products at a reasonable price. When you do this, they will see the value in it.”

“It goes back to what is important to the dealer.” said Cooper, “Sit down with them, evaluate the customer base and decide if appearance protection should be a product that is presented third, sixth or higher on the menu.”

Pavich pointed out that pricing coverage right is a critical component when presenting product offerings. The customer’s monthly payment needs to be taken into consideration when offering appearance products. “It would be tough to bump a payment up $40 for someone with a lease for $199 per month. The payment increase for the product needs to fall in the $6 to $10 range.”

To Bundle or Not to Bundle

Cooper reports he has seen better penetration with bundled product presentations. “A customer can choose if they want to add products to a bundle. We see this as a better play for dealers, and what customers gravitate towards.”

Pavich, on the other hand, reports seeing huge success when products are sold individually. “What benefit is the customer getting with a bundle? Windshield is not going to cover full replacement, it is repair only. The benefit is going to be actual replacement. Some packages of dent protection only provide $250 of dent.”

In a few states, where contracts are now cancelable, bundling products may come with added risk, warned Pavich. He thinks other states may soon start following this practice. “Putting everything on one form could make the whole thing cancelable.”

Understanding and Explaining Coverage

Making sure the customers understand the limits of coverage as well as the F&I managers is very important. Starnes says someone could have a giant scratch keyed across the entire car door and assume it is covered if they weren’t fully informed of what the product covers when they purchased it.

Biller added that the F&I manager must explain what is included and excluded, and note the limitations, deductible, and out of pocket costs. “Paying attention to the benefits when presenting to a customer is important.”

“Lay out the exclusions,” recommends Cooper, “You don’t want something [incorrect] being said when the product is sold and it coming back to you later. If the car comes back with the customer having lots of issues, guess what? The F&I department is not going to sell the product anymore! It sounds like a no brainer but it goes back to getting the correct picture painted with the F&I manager of what is and isn’t covered. It’s critically important in that process.”

In the event that a customer did not understand the coverage and is obviously upset about something not being covered, Pavich suggests that in certain situations, it may be worth it to oblige the customer and eat the cost. “If we need to pay extra to keep that customer coming back and telling their friends, then it’s worth it.”

Making sure that all of a dealer’s F&I managers not only understand the coverage, but are on board and convinced of a product’s value, as well as it’s reliability and effectiveness is crucial. “There is always one F&I manager who sells everything except for one product.” says Phillips, “They have to be convinced that the product is not like ones they have seen in the past that were not quality products. For example, they may have seen a coating in the past that eventually yellowed or became hazy. They need to see and be convinced that the products they are selling are quality products. And we have to show them that they are top quality.”

Technology and Sales

As the push for electronic and digital training and presentations grows, the panel discussed how they are meeting these demands. Cooper emphasized that having cutting edge technology for presentations can make a big difference in capturing customers’ interest.

Biller agreed and expects the demand and appeal to continue to grow. He recommends making technology available to facilitate the process of selling appearance protection products. He believes technology can also offer a means for including the sales department in the process, “If the sales department is part of the process, are they given tools, such as a mobile app, to present products?”.

Taking advantage of the latest advancements technology has to offer is a must as everything becomes more digital, says Starnes. In response, his team, as well as other appearance protection companies, are investing in digital training modules and iPad presentations. “More and more, our clients are leaning towards electronics and are asking for technology.”

Technology can also be used to provide frequent and effective training in the actual application of products. This method is especially valuable in light of the high turnover in the F&I office that dealers face. Most appearance care companies offer various electronic training and videos that can prevent the agent representing the products from having to visit a dealership every time the dealership experiences employee turnover.

If you have not done so already, this panel says it’s worth giving appearance care products a second look. Offering customers a variety of products beyond the service contract can be a great way to shore up the dealer’s bottom line. And that is something all agents want to cash in on!